Ed Rendell on Tax Reform

Democratic PA Governor

Eliminate 74 exemptions & reduce sales tax from 6% to 4%

We should eliminate the 74 non-essential exemptions to the state sales tax. Under our proposal, there will still be no sales tax imposed on essential items like food, clothing, and prescription drugs. And it preserves sales tax exemption for our
manufacturers and non-profit cultural institutions. But we will eliminate exemptions for professional services like fees for lawyers and accountants.

By closing these loopholes, we can broaden the base of the state sales tax and actually reduce it from
6% to 4%. Let me put it another way: my proposal will cut the sales tax statewide for every Pennsylvanian by one-third.

The sales tax today is a testament to the power of lobbyists and special interests. There is little rhyme or reason why we tax some
items or services and wholly exempt others, except that in years past someone lobbied to secure favored treatment for themselves. My proposal calls for the elimination of these loopholes so that everyone pays his or her fair share of the sales tax.

Cut property taxes for regular families

What does it say about us as leaders if we allow families to be driven out of their homes because they canít afford their property taxes? I ask for your help in reducing school property taxes by an average of 30 percent this year.
I say, letís cut these crushing taxes now, and restructure our tax system in ways that make Pennsylvania more attractive to investors, and more equitable to homeowners while restoring vital services that are important to our economic growth.

Source: Budget Address to Pennsylvania General Assembly
, Mar 4, 2003

$12B in federal economic stimulus as state block grants.

Rendell signed $12B in federal economic stimulus as state block grants

The nation's governors urge you to include state countercyclical funding as part of your legislation to stimulate the economy. This would include $6 billion in Medicaid assistance by freezing scheduled federal FMAP reductions and increasing all states' F
Congress approved $20 billion in assistance to states, including $10 billion in Medicaid and $10 billion in block grants. The governors' current stimulus proposal is essentially the same, with the exception that it is a total of $12 billion as opposed to $20 billion. This proposal can be enacted quickly, as there is precedent and it is timely, temporary and targeted.

Additionally, governors appreciate federal efforts to use tax policy to get additional money into the hands of consumers and businesses to stimulate the economy. When considering tax changes to spur economic growth, governors urge Congress and the Administration to follow the maxim of "Do no harm" by avoiding changes at the federal level that would diminish state tax revenues or force state actions that would undermine the effectiveness of federal efforts.

We look forward to working with you to enact the appropriate stimulus program.